PROMISSORY NOTE
$500,000.00 July 12, 2000
RSI Holdings, Inc.
28 East Court Street
Greenville, South Carolina 29601
(Individually and collectively "Borrower")
First Union National Bank
55 Beattie Place
Greenville, South Carolina 29602
(Hereinafter referred to as "Bank")
Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of Five Hundred Thousand and No/100 Dollars ($500,000.00) or
such sum as may be advanced and outstanding from time to time, with interest on
the unpaid principal balance at the rate and on the terms provided in this
Promissory Note (including all renewals, extensions or modifications hereof,
this "Note").
RENEWAL/MODIFICATION. This Promissory Note renews, extends and/or modifies that
certain Promissory Note dated April 30, 1999 (the "Original Promissory Note"),
evidencing an original principal amount of $500,000.00. This Promissory Note is
not a novation.
LOAN AGREEMENT. This Note is subject to the provisions of that certain Loan
Agreement between Bank and Borrower dated April 30, 1999, as modified from time
to time.
SECURITY. (a) MICCO Corporation has granted Bank a security interest in the
collateral described in the Loan Documents, including, but not limited to,
personal property collateral described in that certain Security Agreement of
even date herewith. (b) Minor H. Mickel as granted Bank a security interest in
the collateral described in the Loan Documents, including but not limited to,
personal property collateral described in that certain Security Agreement dated
March 24, 2000.
INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note from the date hereof at the Bank's Prime Rate, as that rate may change from
time to time in accordance with changes in the Bank's Prime Rate, ("Interest
Rate"). "Bank's Prime Rate" shall be that rate announced by Bank from time to
time as its prime rate and is one of several interest rate bases used by Bank.
Bank lends at rates both above and below Bank's Prime Rate, and Borrower
acknowledges that Bank's Prime Rate is not represented or intended to be the
lowest or most favorable rate of interest offered by Bank.
DEFAULT RATE. In addition to all other rights contained in this Note, if a
default in the payment of Obligations occurs, all outstanding Obligations shall
bear interest at the Interest Rate plus 3% ("Default Rate"). The Default Rate
shall also apply from demand until the Obligations or any judgment thereon is
paid in full.
INTEREST AND FEES) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall be
computed on the basis of a 360-day year for the actual number of days in the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective interest yield by taking the stated (nominal)
rate for a year's period and then dividing said rate by 360 to determine the
daily periodic rate to be applied for each day in the applicable period.
Application of the Actual/360 Computation produces an annualized effective rate
exceeding the nominal rate.
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REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly
payments of accrued interest only, commencing on August 15, 2000, and continuing
on the same day of each month thereafter until fully paid. In any event, this
Note shall be due and payable in full, including all principal and accrued
interest, on demand.
APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. Upon the occurrence of a default in the payment of the Obligations
or a Default (as defined in the other Loan Documents) under any other Loan
Document, monies may be applied to the Obligations in any manner or order deemed
appropriate by Bank.
If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.
DEFINITIONS. Loan Documents. The term "Loan Documents" used in this Note and the
other Loan Documents refers to all documents executed in connection with or
related to the loan evidenced by this Note and any prior notes which evidence
all or any portion of the loan evidenced by this Note, and any letters of credit
issued pursuant to any loan agreement to which this Note is subject, any
applications for such letters of credit and any other documents executed in
connection therewith or related thereto, and may include, without limitation, a
commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements, security agreements, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. Sec. 101). Obligations. The term "Obligations" used in this Note refers
to any and all indebtedness and other obligations under this Note, all other
obligations under any other Loan Document(s), and all obligations under any swap
agreements (as defined in 11 U.S.C. Sec. 101) between Borrower and Bank whenever
executed. Certain Other Terms. All terms that are used but not otherwise defined
in any of the Loan Documents shall have the definitions provided in the Uniform
Commercial Code.
LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 15 or more days.
Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.
ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Obligations
including, without limitation, reasonable arbitration, paralegals', attorneys'
and experts' fees and expenses, whether incurred without the commencement of a
suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.
USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.
DEMAND NOTE. This is a demand Note and all Obligations hereunder shall become
immediately due and payable upon demand. In addition, the Obligations shall
automatically become immediately due and payable if Borrower or any guarantor or
endorser of this Note commences or has commenced against it a bankruptcy or
insolvency proceeding.
REMEDIES. Upon the occurrence of a default in the payment of the Obligations or
a Default (as defined in the other Loan Documents) under any other Loan
Document, Bank may at any time thereafter, take the
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following actions: BANK LIEN. Foreclose its security interest or lien against
Borrower's accounts without notice. Cumulative. Exercise any rights and remedies
as provided under the Note and the other Loan Documents, or as provided by law
or equity.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
LINE OF CREDIT ADVANCES. Borrower may borrow, repay and reborrow, and Bank may
advance and readvance under this Note respectively from time to time until the
maturity hereof (each an "Advance" and together the "Advances"), so long as the
total principal balance outstanding under this Note at any one time does not
exceed the principal amount stated on the face of this Note, subject to the
limitations described in any loan agreement to which this Note is subject.
Bank's obligation to make Advances under this Note shall terminate if a demand
for payment is made under this Note or if a Default (as defined in the other
Loan Documents) under any Loan Document occurs or in any event, on January 1,
2001 unless renewed or extended by Bank in writing upon such terms then
satisfactory to Bank. As of the date of each proposed Advance, Borrower shall be
deemed to represent that each representation made in the Loan Documents is true
as of such date.
If Borrower subscribes to Bank's cash management services and such services are
applicable to this line of credit, the terms of such service shall control the
manner in which funds are transferred between the applicable demand deposit
account and the line of credit for credit or debit to the line of credit.
WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default (as defined in the other Loan
Documents) shall operate as a waiver of any other Default or the same Default on
a future occasion. Neither the failure nor any delay on the part of Bank in
exercising any right, power, or remedy under this Note and other Loan Documents
shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
Each Borrower or any person liable under this Note waives presentment, protest,
notice of dishonor, notice of intention to accelerate maturity, notice of
acceleration of maturity, notice of sale and all other notices of any kind.
Further, each agrees that Bank may extend, modify or renew this Note or make a
novation of the loan evidenced by this Note for any period, and grant any
releases, compromises or indulgences with respect to any collateral securing
this Note, or with respect to any other Borrower or any other person liable
under this Note or other Loan Documents, all without notice to or consent of
each Borrower or each person who may be liable under this Note or any other Loan
Document and without affecting the liability of Borrower or any person who may
be liable under this Note or any other Loan Document.
MISCELLANEOUS PROVISIONS. ASSIGNMENT. This Note and the other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Note and the other Loan Documents are freely
assignable, in whole or in part, by Bank. In addition, nothing in this Note or
any of the other Loan Documents shall prohibit Bank from pledging or assigning
this Note or any of the other Loan Documents or any interest therein to any
Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Bank, and any attempt by Borrower
to assign without Bank's prior written consent is null and void. Any assignment
shall not release Borrower from the Obligations. Applicable Law; Conflict
Between Documents. This Note and the other Loan Documents shall be governed by
and construed under the laws of the state named in Bank's address shown above
without regard to that state's conflict of laws principles. If the terms of this
Note should conflict with the terms of the Loan Agreement or any commitment
letter that survives closing, the terms of this Note shall control. Borrower's
Accounts. Except as prohibited by law, Borrower grants Bank a security interest
in all of Borrower's accounts with Bank and any of its affiliates. Jurisdiction.
Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state
named in Bank's address shown above. Severability.
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If any provision of this Note or of the other Loan Documents shall be prohibited
or invalid under applicable law, such provision shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Note or other such
document. Notices. Any notices to Borrower shall be sufficiently given, if in
writing and mailed or delivered to the Borrower's address shown above or such
other address as provided hereunder, and to Bank, if in writing and mailed or
delivered to Bank's office address shown above or such other address as Bank may
specify in writing from time to time. In the event that Borrower changes
Borrower's address at any time prior to the date the Obligations are paid in
full, Borrower agrees to promptly give written notice of said change of address
by registered or certified mail, return receipt requested, all charges prepaid.
Plural; Captions. All references in the Loan Documents to Borrower, guarantor,
person, document or other nouns of reference mean both the singular and plural
form, as the case may be, and the term "person" shall mean any individual,
person or entity. The captions contained in the Loan Documents are inserted for
convenience only and shall not affect the meaning or interpretation of the Loan
Documents. Advances. Bank may, in its sole discretion, make other advances which
shall be deemed to be advances under this Note, even though the stated principal
amount of this Note may be exceeded as a result thereof. Posting of Payments.
All payments received during normal banking hours after 2:00 p.m. local time at
the office of Bank first shown above shall be deemed received at the opening of
the next banking day. Joint and Several Obligations. Each person who signs this
Note as a Borrower (as defined herein) is jointly and severally obligated. Fees
and Taxes. Borrower shall promptly pay all documentary, intangible recordation
and/or similar taxes on this transaction whether assessed at closing or arising
from time to time.
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of
or relating to the Loan Documents between parties hereto (a "Dispute") shall be
resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may include, without limitation, tort claims, counterclaims, a dispute as to
whether a matter is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A judgment upon the award
may be entered in any court having jurisdiction. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements. Special Rules. All arbitration hearings shall be conducted in the
city named in the address of Bank first stated above. A hearing shall begin
within 90 days of demand for arbitration and all hearings shall conclude within
120 days of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then for no more than a total of 60
days. The expedited procedures set forth in Rule 51 et seg. of the Arbitration
Rules shall be applicable to claims of less than $1,000,000.00. Arbitrators
shall be licensed attorneys selected from the Commercial Financial Dispute
Arbitration Panel of the AAA. The parties do not waive applicable Federal or
state substantive law except as provided herein. Preservation and Limitation of
Remedies. Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that any party
may exercise before or after an arbitration proceeding is brought. The parties
shall have the right to proceed in any court of proper jurisdiction or by
self-help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other security
by exercising a power of sale or under applicable law by judicial foreclosure
including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment. Any
claim or controversy with regard to any party's entitlement to such remedies is
a Dispute. Waiver of Exemplary Damages. The parties agree that they shall not
have a remedy of punitive or exemplary damages against other parties in any
Dispute and hereby waive any right or claim to punitive or exemplary damages
they have now or which may arise in the future in connection with any Dispute
whether the Dispute is resolved by arbitration or judicially. Waiver of Jury
Trial. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE
IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY TRIAL WITH REGARD TO A
DISPUTE.
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IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be executed under seal.
PLACE OF EXECUTION AND DELIVERY. Borrower hereby certifies that this Note and
the Loan Documents were executed in the State of North Carolina and delivered to
Bank in the State of North Carolina.
RSI Holdings, Inc.
Taxpayer Identification Number: 56-1200363
By: /s/ Buck A. Mickel (SEAL)
---------------------------------
Buck A. Mickel, President/CEO
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SECURITY AGREEMENT
July 12, 2000
MICCO Corporation
c/o uck A. Mickel
28 East Court Street
Greenville, South Carolina 29601
(Individually and collectively
"Debtor")
First Union National Bank
55 Beattie Place
Greenville, South Carolina 29602
(Hereinafter referred to as "Bank")
This Security Agreement amends and restates that certain Security Agreement
dated April 30, 1999.
For value received and to secure payment and performance of the Promissory Note
executed by RSI Holdings, Inc. ("Borrower") of even date herewith, in the
original principal amount of $500,000.00, payable to Bank, and any extensions,
renewals, modifications or novations thereof (the "Note"), this Security
Agreement and the other Loan Documents, and any other obligations of Borrower to
Bank however created, arising or evidenced, whether direct or indirect, absolute
or contingent, now existing or hereafter arising or acquired, and whether or not
evidenced by a Loan Document, including swap agreements (as defined in 11 U.S.C.
Sec. 101), future advances, and all costs and expenses incurred by Bank to
obtain, preserve, perfect and enforce the security interest granted herein and
to maintain, preserve and collect the property subject to the security interest
(collectively, "Obligations"), Debtor hereby grants to Bank a continuing
security interest in and lien upon the following described property, whether now
owned or hereafter acquired, and any additions, replacements, accessions, or
substitutions thereof and all cash and non-cash proceeds and products thereof
(collectively, "Collateral"):
SEE SCHEDULE A ATTACHED HERETO AND MADE A PART HEREOF
Debtor hereby represents and agrees that:
OWNERSHIP. Debtor owns the Collateral. The Collateral is free and clear of all
liens, security interests, and claims except those previously reported in
writing to Bank, and Debtor will keep the Collateral free and clear from all
liens, security interests and claims, other than those granted to Bank. All
securities and security entitlements pledged as Collateral are fully paid and
non-assessable and if certificated, have been delivered to Bank with
unrestricted endorsements. All income, dividends, earnings and profits with
respect to the Collateral shall be reported for state and federal income tax
purposes as attributable to the Debtor and not Bank, and Third Party (as defined
herein), Bank or any other person authorized to report income distributions, are
authorized to issue IRS Forms 1099 indicating Debtor as the recipient of such
income, earnings and profits.
NAME AND OFFICES. There has been no change in the name of Debtor, or the name
under which Debtor conducts business, within the five years preceding the date
hereof and Debtor has not moved its executive offices or residence within the
five years preceding the date hereof except as previously reported in writing to
Bank.
TITLE/TAXES. Debtor has good and marketable title to Collateral and will warrant
and defend same against all claims. Debtor will not transfer, sell, or lease
Collateral (except as permitted herein). Debtor agrees to pay promptly all taxes
and assessments upon or for the use of Collateral and on this Security
Agreement. At its option, Bank may discharge taxes, liens, security interests or
other encumbrances at
<PAGE>
any time levied or placed on Collateral. Debtor agrees to reimburse Bank, on
demand, for any such payment made by Bank. Any amounts so paid shall be added to
the Obligations.
WAIVERS. Debtor waives presentment, demand, protest, notice of dishonor, notice
of default, demand for payment, notice of intention to accelerate, and notice of
acceleration of maturity. Debtor further agrees not to assert against Bank as a
defense (legal or equitable), as a set-off, as a counterclaim, or otherwise, any
claims Debtor may have against any seller or lessor that provided personal
property or services relating to any part of the Collateral. Debtor waives all
exemptions and homestead rights with regard to the Collateral. Debtor waives any
and all rights to notice or to hearing prior to Bank's taking immediate
possession or control of any Collateral, and to any bond or security which might
be required by applicable law prior to the exercise of any of Bank's remedies
against any Collateral. All rights of Bank and security interests hereunder, and
all obligations of Debtor hereunder, shall be absolute and unconditional, not
discharged or impaired irrespective of (and regardless of whether Debtor
receives any notice of): (i) any lack of validity or enforceability of any Loan
Document; (ii) any change in the time, manner or place of payment or
performance, or in any term, of all or any of the Obligations or the Loan
Documents or any other amendment or waiver of or any consent to any departure
from any Loan Document; (iii) any exchange, release or non-perfection of any
collateral, or any release of or modifications of the obligations of any
guarantor or other obligor; (iv) any amendment or waiver of or consent to
departure from any Loan Document or other agreement. To the extent permitted by
law, Debtor hereby waives any rights under any valuation, stay, appraisement,
extension or redemption laws now existing or which may hereafter exist and
which, but for this provision, might be applicable to any sale or disposition of
the Collateral by Bank; and any other circumstance which might otherwise
constitute a defense available to, or a discharge of any party with respect to
the Obligations.
NOTIFICATIONS. Debtor will notify Bank in writing at least 30 days prior to any
change in: (i) Debtor's chief place of business and/or residence; (ii) Debtor's
name or identity; or (iii) Debtor's corporate/organizational structure. In
addition, Debtor shall promptly notify Bank of any claims or alleged claims of
any other person or entity to the Collateral or the institution of any
litigation, arbitration, governmental investigation or administrative
proceedings against or affecting the Collateral. Debtor will keep Collateral at
the location(s) previously provided to Bank until such time as Bank provides
written advance consent to a change of location. Debtor will bear the cost of
preparing and filing any documents necessary to protect Bank's liens.
FINANCING STATEMENTS, POWER OF ATTORNEY. No financing statement (other than any
filed by Bank or disclosed above) covering any Collateral is on file in any
public filing office. On request of Bank, Debtor will execute one or more
financing statements in form satisfactory to Bank and will pay all costs and
expenses of filing the same or of filing this Security Agreement in all public
filing offices, where filing is deemed by Bank to be desirable. Bank is
authorized to file financing statements relating to Collateral without Debtor's
signature where authorized by law. Debtor hereby constitutes and appoints Bank
the true and lawful attorney of Debtor with full power of substitution to take
any and all appropriate action and to execute any and all documents or
instruments that may be necessary or desirable to accomplish the purpose and
carry out the terms of this Security Agreement, including, without limitation,
endorsements desirable for transfer or delivery of any Collateral, registration
of any Collateral under applicable laws, retitling any Collateral, receipt,
endorsement and/or collection of all checks and other orders for payment of
money payable to Debtor with respect to Collateral. The foregoing power of
attorney is coupled with an interest and shall be irrevocable until all of the
Obligations have been paid in full. Neither Bank nor anyone acting on its behalf
shall be liable for acts, omissions, errors in judgment, or mistakes in fact in
such capacity as attorney-in-fact. Debtor ratifies all acts of Bank as
attorney-in-fact. Debtor agrees to take such other actions as might be requested
for the perfection, continuation and assignment, in whole or in part, of the
security interests granted herein. If certificates, passbooks, or other
documentation or evidence is/are issued or outstanding as to any of the
Collateral, Debtor will cause the security interests of Bank to be properly
protected, including perfection by notation thereon or delivery thereof to Bank.
Upon Bank's request, Debtor will, at its own expense: (i) do all things
determined by Bank to be desirable to register such Collateral or qualify for an
exemption from registration, under the provisions of all applicable securities
laws, and (ii) otherwise do or cause to be done all other acts and things as may
be necessary to make the sale of the Collateral valid, binding and in compliance
with applicable law.
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STOCK, DIVIDENDS. If, with respect to any securities pledged hereunder, a stock
dividend is declared, any stock split made or right to subscribe is issued, all
the certificates for the shares representing such stock dividend, stock split or
right to subscribe will be immediately delivered, duly endorsed, to the Bank as
additional Collateral, and any cash or non-cash proceeds and products thereof,
including investment property and security entitlements will be immediately
delivered to Bank. Debtor acknowledges that such grant includes all investment
property and security entitlements, now existing or hereafter arising, relating
to such securities. In addition, Debtor agrees to execute such notices and
instructions to securities intermediaries as Bank may reasonably request.
VALUE REQUIREMENT. The outstanding balance of the Obligations shall not exceed
at any time 50.00% of the Fair Market Value of the securities pledged to Bank
hereunder. If at any time the outstanding balance of the Obligations exceeds
this percentage, Debtor shall, within 3 business days, either pledge and deliver
additional securities or reduce the outstanding balance of the Obligations so
that the outstanding balance of the Obligations does not exceed the stated
percentage as of the close of business on the day immediately preceding such
delivery or reduction. "Fair Market Value" means the value of the securities
pledged hereunder based on the closing price per unit of any of the investment
property which is a part of the Collateral as quoted or reported in The Wall
Street Journal or, if not available, other customary publication of such
information, plus the amount of any cash or other financial assets comprising
the Collateral. If the Fair Market Value of any securities pledged hereunder
cannot be determined by the foregoing procedure, the Fair Market Value of such
Collateral shall be determined by the Bank by reference to such public
information as may be available.
NO TRADING OF COLLATERAL. Until a Default occurs, Debtor shall have the right to
vote the securities pledged hereunder; provided, however, Debtor may not sell,
transfer, exchange for other property or cash ("Trade") or otherwise exercise
rights with respect to such Collateral or receive any distributions, cash
dividends, interest, or proceeds from such Collateral without the prior written
consent of the Bank, and any such distributions, dividends, interest, or
proceeds shall be held in trust for, and immediately delivered to, Bank. Any
consent pursuant to this paragraph shall be in Bank's sole discretion.
COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to perform
with respect to Collateral pledged except as set forth herein; and by way of
explanation and not by way of limitation, Bank shall incur no liability for any
of the following: (i) loss or depreciation of Collateral (unless caused by its
willful misconduct or gross negligence), (ii) failure to present any paper for
payment or protest, to protest or give notice of nonpayment, or any other notice
with respect to any paper or Collateral, (iii) failure to ascertain, notify
Debtor of, or take any action in connection with any conversion, call,
redemption, retirement or any other event relating to any of the Collateral, or
failure to notify any party hereto that Collateral should be presented or
surrendered for any such reason. Debtor acknowledges that Bank is not an
investment advisor or insurer with respect to the Collateral; and Bank has no
duty to advise Debtor of any actual or anticipated changes in the value of the
Collateral.
TRANSFER OF COLLATERAL. Bank may assign its rights in Collateral or any part
thereof to any assignee who shall thereupon become vested with all the powers
and rights herein given to Bank with respect to the property so transferred and
delivered, and Bank shall thereafter be forever relieved and fully discharged
from any liability with respect to such property so transferred, but with
respect to any property not so transferred, Bank shall retain all rights and
powers hereby given.
INSPECTION, BOOKS AND RECORDS. Debtor will at all times keep accurate and
complete records covering each item of Collateral, including the proceeds
therefrom. Bank, or any of its agents, shall have the right, at intervals to be
determined by Bank and without hindrance or delay, to inspect, audit, and
examine the Collateral and to make extracts from the books, records, journals,
orders, receipts, correspondence and other data relating to Collateral, Debtor's
business or any other transaction between the parties hereto. Debtor will at its
expense furnish Bank copies thereof upon request.
CROSS COLLATERALIZATION LIMITATION. As to any other existing or future consumer
purpose loan made by Bank to Debtor, within the meaning of the Federal Consumer
Credit Protection Act, Bank
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expressly waives any security interest granted herein in Collateral that Debtor
uses as a principal dwelling and household goods.
ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Debtor shall pay all of Bank's
reasonable expenses incurred in enforcing this Security Agreement and in
preserving and liquidating Collateral, including but not limited to, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses, whether
incurred with or without the commencement of a suit, trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.
DEFAULT. If any of the following occurs, a default ("Default") under this
Security Agreement shall exist: (i) the failure of timely payment or performance
of any of Obligations or a default under any Loan Document; (ii) any breach of
any representation or agreement contained or referred to in this Security
Agreement or other Loan Document; (iii) any loss, theft, substantial damage, or
destruction of Collateral not fully covered by insurance, or as to which
insurance proceeds are not remitted to Bank within 30 days of the loss; (iv) any
sale, lease, or encumbrance of any Collateral not specifically permitted herein
without prior written consent of Bank; (v) the making of any levy, seizure, or
attachment on or of Collateral which is not removed within 10 days; (vi) the
death of, appointment of guardian for, dissolution of, termination of existence
of, loss of good standing status by, appointment of a receiver for, assignment
for the benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against Debtor, its Subsidiaries or Affiliates ("Affiliate"
shall have the meaning as defined in 11 U.S.C. Sec. 101; and "Subsidiary" shall
mean any corporation of which more than 50% of the issued and outstanding voting
stock is owned directly or indirectly by Debtor), if any, or any general partner
of or the holder(s) of the majority ownership interests in Debtor or any party
to the Loan Documents; or (vii) any attempt to terminate, revoke, rescind,
modify, or violate the terms of this Security Agreement without the prior
written consent of Bank.
REMEDIES ON DEFAULT (INCLUDING POWER OF SALE). If a Default occurs, all of the
Obligations shall be immediately due and payable, without notice and Bank shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code. Without limitation thereto, Bank shall have the following rights and
remedies: (i) to take immediate possession of Collateral, without notice or
resort to legal process, and for such purpose, to enter upon any premises on
which Collateral or any part thereof may be situated and to remove the same
therefrom, or, at its option, to render Collateral unusable or dispose of said
Collateral on Debtor's premises; (ii) to require Debtor to assemble the
Collateral and make it available to Bank at a place to be designated by Bank;
(iii) to exercise its right of set-off or bank lien as to any monies of Debtor
deposited in accounts of any nature maintained by Debtor with Bank or affiliates
of Bank, without advance notice, regardless of whether such accounts are general
or special; (iv) to dispose of Collateral, as a unit or in parcels, separately
or with any real property interests also securing the Obligations, in any county
or place to be selected by Bank, at either private or public sale (at which
public sale Bank may be the purchaser) with or without having the Collateral
physically present at said sale. In addition to the foregoing, Bank shall be
authorized to: transfer into Bank's name or the name of its nominee, all or any
part of the Collateral; receive all interest, dividends, and other proceeds of
the Collateral; notify any person obligated on any Collateral of the security
interest of Bank therein and require such person to make payment directly to
Bank; demand, sue for, collect or receive the Collateral and any proceeds
thereof, and/or make any settlement or compromise as Bank deems desirable with
respect to any Collateral; and exercise any voting, conversion, registration,
purchase or other rights of an owner, holder or entitlement holder of the
Collateral. Debtor agrees that Bank may exercise its rights under this Security
Agreement without regard for the actual or potential tax consequences to Debtor
under federal or state law and without regard to any instructions or directives
given Bank by Debtor.
Any notice of sale, disposition or other action by Bank required by law and sent
to Debtor at Debtor's address shown above, or at such other address of Debtor as
may from time to time be shown on the records of Bank, at least 5 days prior to
such action, shall constitute reasonable notice to Debtor. Notice shall be
deemed given or sent when mailed postage prepaid to Debtor's address as provided
herein. Bank shall be entitled to apply the proceeds of any sale or other
disposition of the Collateral, and the payments received by Bank with respect to
any of the Collateral, to Obligations in such order and manner as Bank may
determine. Collateral that is subject to rapid declines in value and is
customarily sold in
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recognized markets may be disposed of by Bank in a recognized market for such
collateral without providing notice of sale. Debtor waives any and all
requirements that the Bank sell or dispose of all or any part of the Collateral
at any particular time, regardless of whether Debtor has requested such sale or
disposition.
REMEDIES ARE CUMULATIVE. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Bank or any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law, in equity, or
in other Loan Documents.
MISCELLANEOUS. (i) Amendments and Waivers. No waiver, amendment or modification
of any provision of this Security Agreement shall be valid unless in writing and
signed by Debtor and an officer of Bank. No waiver by Bank of any Default shall
operate as a waiver of any other Default or of the same Default on a future
occasion. (ii) Assignment. All rights of Bank hereunder are freely assignable,
in whole or in part, and shall inure to the benefit of and be enforceable by
Bank, its successors, assigns and affiliates. Debtor shall not assign its rights
and interest hereunder without the prior written consent of Bank, and any
attempt by Debtor to assign without Bank's prior written consent is null and
void. Any assignment shall not release Debtor from the Obligations. This
Security Agreement shall be binding upon Debtor, and the heirs, personal
representatives, successors, and assigns of Debtor. (iii) Applicable Law;
Conflict Between Documents. This Security Agreement shall be governed by and
construed under the law of the state named in the address of the Bank first
shown above without regard to that state's conflict of laws principles. If any
terms of this Security Agreement conflict with the terms of any commitment
letter or loan proposal, the terms of this Security Agreement shall control.
(iv) Jurisdiction. Debtor irrevocably agrees to non-exclusive personal
jurisdiction in the state in which the office of Bank as stated above is
located. (v) Severability. If any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement. (vi) Notices. Any notices to Debtor shall be sufficiently
given, if in writing and mailed or delivered to the address of Debtor shown
above or such other address as provided hereunder; and to Bank, if in writing
and mailed or delivered to Bank's office address shown above or such other
address as Bank may specify in writing from time to time. In the event that
Debtor changes Debtor's mailing address at any time prior to the date the
Obligations are paid in full, Debtor agrees to promptly give written notice of
said change of address by registered or certified mail, return receipt
requested, all charges prepaid. (vii) Captions. The captions contained herein
are inserted for convenience only and shall not affect the meaning or
interpretation of this Security Agreement or any provision hereof. The use of
the plural shall also mean the singular, and vice versa. (viii) Joint and
Several Liability. If more than one party has signed this Security Agreement,
such parties are jointly and severally obligated hereunder. (ix) Binding
Contract. Debtor by execution and Bank by acceptance of this Security Agreement,
agree that each party is bound by all terms and provisions of this Security
Agreement. (x) Loan Documents. The term "Loan Documents" refers to all
documents, whether now or hereafter existing, executed in connection with or
related to the Obligations and may include, without limitation and whether
executed by Debtor or others, commitment letters, loan agreements, guaranty
agreements, confirmations, deposit or other similar agreements, other security
agreements, letters of credit, instruments, financing statements, mortgages,
deeds of trust, deeds to secure debt, and any amendments or supplements
(excluding swap agreements as defined in 11 U.S.C. Sec. 101).
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of
or relating to the Loan Documents between parties hereto (a "Dispute") shall be
resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may include, without limitation, tort claims, counterclaims, a dispute as to
whether a matter is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A judgment upon the award
may be entered in any court having jurisdiction. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements. Special Rules. All arbitration hearings shall be
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conducted in the city named in the address of Bank first stated above. A hearing
shall begin within 90 days of demand for arbitration and all hearings shall
conclude within 120 days of demand for arbitration. These time limitations may
not be extended unless a party shows cause for extension and then for no more
than a total of 60 days. The expedited procedures set forth in Rule 51 et seg.
of the Arbitration Rules shall be applicable to claims of less than
$1,000,000.00. Arbitrators shall be licensed attorneys selected from the
Commercial Financial Dispute Arbitration Panel of the AAA. The parties do not
waive applicable Federal or state substantive law except as provided herein.
Preservation and Limitation of Remedies. Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without diminution,
certain remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sale; (ii) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (iv) when applicable, a
judgment by confession of judgment. Any claim or controversy with regard to any
party's entitlement to such remedies is a Dispute. Waiver of Exemplary Damages.
The parties agree that they shall not have a remedy of punitive or exemplary
damages against other parties in any Dispute and hereby waive any right or claim
to punitive or exemplary damages they have now or which may arise in the future
in connection with any Dispute whether the Dispute is resolved by arbitration or
judicially. Waiver of Jury Trial. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO
BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY
TRIAL WITH REGARD TO A DISPUTE.
IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused
this Security Agreement to be executed under seal.
MICCO Corporation
Taxpayer Identification Number: 57-0551217
By: /s/ Buck A. Mickel (SEAL)
----------------------------------
Buck A. Mickel, Vice President
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Schedule A to UCC
All securities that are certificated and held in vault at Bank, described as
follows:
Common stock issued by Delta Woodside Industries, Inc. in the name of MICCO
Corporation, cusip number 247909 10 4. Shares represented in certificate numbers
as follows:
Certificate No. Shares
AC 2640 20,000
AC 2641 20,000
AC 2642 20,000
AC 2643 20,000
AC 2644 20,000
AC 2645 20,000
AC 2646 20,000
AC 2669 10,000
AC 2670 10,000
AC 2671 10,000
AC 2638 20,000
AC 2639 20,000
AC 2667 10,000
AC 2672 10,000
AC 2673 10,000
AC 2674 10,000
AC 2675 10,000
AC 2676 10,000
AC 2677 10,000
AC 2678 10,000
AC 2679 10,000
AC 2680 10,000
AC 2681 10,000
AC 2682 10,000
AC 2683 10,000
AC 2684 10,000
AC 2685 10,000
AC 2686 10,000
AC 2687 10,000
AC 2703 10,000
AC 2704 10,000
AC 2751 5,000
AC 2752 5,000
AC 2753 5,000
AC 2762 5,000
AC 2763 5,000
AC 2764 5,000
AC 2765 5,000
AC 2770 5,000
AC 2793 9,234
All products and proceeds (including investment property and security
entitlements) of any of the property described above in any form, and all
proceeds of such products.
